Obama Win Raises Odds of Extending Tax Credit for Wind

Nov. 7 (Bloomberg) -- President Barack Obama’s re-election
will probably be followed by Congress extending a renewable-energy tax credit, according to the American Wind Energy
Association.

Congress will likely renew the Production Tax Credit before
it expires at the end of the year, said Denise Bode, chief
executive officer of the Washington-based industry group.

Obama’s support for renewable energy and the U.S. wind
industry is a critical component of the effort to renew the
credit that pays 2.2 cents a kilowatt-hour for power produced by
wind and other renewable sources, Bode said. The Republican
presidential challenger Mitt Romney said he opposes subsidies
for renewable energy.

“Swing states with wind farms and factories went
overwhelming for Obama and that helps remove uncertainty
regarding the extension,” Bode said today in an interview.

Republicans including Iowa representatives Steve King and
Tom Latham will help ensure that Congress passes a bill to
extend the tax credit, she said.

“There’s strong bipartisan support for wind and we look
forward to immediate action,” Bode said. “An immediate one-year extension would restart development and protect jobs”

There are about 75,000 U.S. wind-industry workers,
according to AWEA, most in Texas, Iowa and Midwest states that
typically vote for Republicans. Letting the credit lapse will
lead to the elimination of 37,000 wind-industry jobs, the trade
group has estimated.

Slow Development

Renewing the tax credit this year may not avert all job
losses or boost turbine sales until the second half of 2013
because of the long lead-time needed to develop wind farms, said
Amy Grace, a wind industry analyst at Bloomberg New Energy
Finance in New York.

“We’d probably start to see a lot of projects financed in
the third and fourth quarter, resulting in a spike of turbine
orders in the second half,” Grace said. If the credit gets a
12-month extension, to qualify “projects only need to start
construction next year, not reach commercial operation.”

That may reverse declines at manufacturers such as
Broadwind Energy Inc., which makes steel towers for turbines,
said Alex Morris, an analyst at Raymond James & Associates in
Houston.

“The results from yesterday certainly make a PTC extension
more likely,” Morris said. “If the PTC is extended, there
would probably be upside in the stock.”

Broadwind, based in Naperville, Illinois, has dropped 48
percent in the past year as sales stagnated. Denmark’s Vestas
Wind Systems A/S, the world’s largest maker of turbines, has
dropped 68 percent in the past year.

Turbine installations next year in the U.S. are expected to
fall as much as 88 percent to as low as 1.5 gigawatts next year
if the credit isn’t extended, according to New Energy Finance.